SHAMBLIN v. CITY OF COLCHESTER

April 16, 1992

DONALD SHAMBLIN, PLAINTIFF,v.CITY OF COLCHESTER, DEFENDANT.

The opinion of the court was delivered by: McDADE, District Judge.

ORDER

Before the Court is Defendant's Motion To Amend Counterclaim And To
Extend Discovery Deadline (Doc. 18, Part 1). For the foregoing reasons,
Defendant's motion is denied. This case is referred back to the
Magistrate Judge.

FACTUAL BACKGROUND

Defendant seeks to amend its counterclaim against Plaintiff by adding a
Count II based upon the Plaintiff's alleged breach of fiduciary duty to
the City while employed as a police officer. Defendant claims that on or
about December 13, 1991, it was served with the Plaintiff's Supplemental
Response to Defendant's first Set of Interrogatories and learned for the
first time of an "interview" with a Mr. "Butch" Beadles, a former City
Police officer. The person conducting this interview reported, in part:

Beadles believes Don [Shamblin] was involved in drug
sales, alcohol sales and thefts. He reported that
juveniles told him Don tried to induce them to steal
merchandise for him. Among other incidents Beadles
reports the following: Don resided above a laundromat
in Colchester. On one occasion he had a party for
juveniles. One juvenile was intoxicated to the extent
that he went to sleep and burned his feet on an open
hot air register.

Plaintiff claims that Defendant was aware that Beadles had knowledge
about Plaintiff's work and non-work activities during the time period of
Plaintiff's employment in late September of 1991, but chose not to depose
Beadles prior to the close of discovery on November 15, 1991.
Thereafter, Defendant mailed Plaintiff a copy of an interview with
Beadles prepared by an investigator at the direction of Plaintiff's
counsel. Plaintiff attacks the City's motion to amend and to extend the
discovery deadline as untimely since Defendant had knowledge of Beadles
in September and, with reasonable effort, could have discovered his
evidence prior to the close of discovery. Plaintiff further argues that
Defendant's motion and the amended counterclaim violate Rule 11 because
their only factual bases are the unsubstantiated, hearsay statements of a
biased witness.

LEGAL STANDARDS

Defendant's Motion To Amend Counterclaim And To Extend Discovery
Deadline must be denied because this Court lacks subject matter
jurisdiction over the claim set forth in the proposed amendment. A
federal court must at the outset examine whether jurisdiction exists
before proceeding to the merits, and may raise the issue sua sponte where
the parties have not raised it themselves. A. G. Edwards & Sons, Inc. v.
Public Building Comm'n of St. Clair County, Illinois, 921 F.2d 118,
120-21 n. 2 (7th Cir. 1990). The amendment to the counterclaim sets forth
a state law breach of fiduciary duty claim between citizens of the same
state and does not fall within the Court's federal question or diversity
jurisdiction. Defendant's only potential basis for jurisdiction lies
under The Judicial Improvements Act of 1990, which provides that a
federal court has supplemental jurisdiction over those, claims "that are
so related to claims in the action within . . . [the court's] original
jurisdiction that they form part of the same case or controversy under
Article III of the United States Constitution." 28 U.S.C. § 1367. A
federal court has supplemental jurisdiction over compulsory
counterclaims; however, permissive counterclaims require their own
jurisdictional basis. Unique Concepts, Inc. v. Manuel, 930 F.2d 573,
574-75 reh'g denied (7th Cir.1991).

Rule 13 of the Federal Rules of Civil Procedure describes those
counterclaims which are compulsory. A compulsory counterclaim under rule
13(a) is one that (1) exists at the time of the pleading, (2) arises out
of the same transaction or occurrence as the opposing party's claim, and
(3) does not require for adjudication parties over whom the court may not
acquire jurisdiction. Burlington Northern R.R. Co. v. Strong, 907 F.2d 707,
710-11 (7th Cir. 1990). Defendant's proposed counterclaim does not
interject new parties into the action. And although the evidence
underlying Defendant's proposed counterclaim was apparently unknown to
Defendant at the time that Plaintiff filed suit, that fact that the
counterclaim is not compulsory in this sense does not deprive the Court
of jurisdiction. Harbor Ins. Co. v. Continental Bank Corp., 922 F.2d 357
(1990), reh'g denied (7th Cir. 1991).

However, the parties' claims do not arise out of the same transaction
or occurrence, The Seventh Circuit has developed a "logical relationship"
test to determine whether the "same transaction or occurrence"
requirement is satisfied. Burlinton, 907 F.2d at 711. As stated in
Burlington:

"Courts generally have agreed that the word
"transaction or occurrence' should be interpreted
liberally in order to further the general policies of
the federal rules and carry out the philosophy of Rule
13(a).... As a word of flexible meaning,
`transaction' may comprehend a series of many
occurrences, depending not so much upon the
immediateness of their connection as upon their
logical relationship.... [A] counterclaim that has its
roots in a separate transaction or occurrence is
permissive and is governed by Rule 13(b)." Id.
(quoting Gilldorn Sav. Ass'n v. Commerce Sav. Ass'n,
804
F.2d 390, 396 (7th Cir. 1986) (quoting Warshawsky &
Co. v. Arcata Nat'l Corp., 552 F.2d 1257, 1261 (7th
Cir. 1977))).

In determining whether claims are logically related, a court should
consider "the totality of the claims, including the nature of the
claims, the legal basis for recovery, the law involved, and the
respective factual backgrounds." Burlington, 907 F.2d at 711-12.
Examination of these factors in the present case reveals that Defendant's
proposed counterclaim does not arise out of the same transaction or
occurrence as Plaintiff's claim.*fn1 Plaintiff's claim that the time he
spent on-call while employed by Defendant is compensable under the Fair
Labor Standards Act and the Illinois Minimum Wage Act arises out of the
conditions of his on-call employment status and the nature of the
activities engaged in while on call. Defendant's proposed counterclaim
that Plaintiff breached a fiduciary duty owed by a police officer to a
city that employs him arises out of Plaintiff's allegedly criminal
private activities during the time period that he was employed by
Defendant. The two claims raise different legal and factual issues
governed by different bodies of law, and ...

Our website includes the first part of the main text of the court's opinion.
To read the entire case, you must purchase the decision for download. With purchase,
you also receive any available docket numbers, case citations or footnotes, dissents
and concurrences that accompany the decision.
Docket numbers and/or citations allow you to research a case further or to use a case in a
legal proceeding. Footnotes (if any) include details of the court's decision. If the document contains a simple affirmation or denial without discussion,
there may not be additional text.

Buy This Entire Record For
$7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.